Tuesday, 25 March 2014

Is anyone making money out of Championship football ?

Charlton Athletic's accounts (or more accurately its holding company Baton (2010) Ltd) for the year ending June 2013 are due for filing at Companies House by the end of March.
For a refresher on last year's results please take a look at the excellent analysis by New York Addick here

I'm not expecting any surprises as we know the previous owners were struggling to put any more money into the club and the transfer budget was severely constrained.  It was however our first year back in the Championship after a record points season in League One so it will be interesting to see how revenues have fared since.  The change in ownership falls in the current year and so will have no impact on the results but may well have allowed the auditors to sign off the company as a going concern.
With the advent of Financial Fair Play I thought we would take a look at how other teams in the Championship division have managed so far and see if we can draw any conclusions on how prepared we all are.
First a word of caution on the figures.  Most clubs appear to have financial year ends at the end of the football season in May/June 2013 but not all of them, so the periods may not be directly comparable and in some cases the clubs (including Charlton) have yet to publish their latest accounts.  The figures quoted are usually the statutory profit/loss required under companies law and do not directly translate into the profitability or otherwise as determined under the FFP rules.  For example costs relating to stadium improvements or youth development are ignored for the purposes of FFP.  So the figures shown are not directly comparable but give a good indication of a club's ability to reach the FFP requirements.

Finally, some clubs have a complex web of legal entities, for various reasons including tax efficiency and protecting assets such as the stadium.  Just look at the Blackpool blog link below to see a prime example.  This understandably may cloud the headline figures that I have stated and the club may actually be in a far different position to those stated when taken as a whole.
AFC Bournemouth
AFC Bournemouth lost £3.4m in the financial year ending July 2012 amid concerns from auditors over the company's ability to continue trading.  According to the BBC, the figures highlight the importance of Russian co-owner Max Demin's involvement at the Goldsands Stadium.  The 2013 accounts are not due until April but I expect further losses of the same magnitude and injections in line with current FFP rules.

Accounts for Barnsley Football Club (2002) Ltd were filed in January and show
an increased profit of £1.9m after a small profit of £30,246 in the previous 12 months 
The Birmingham City director Peter Pannu was paid nearly £1m in 2012-13, a year in which the club lost £4m and sank into a perilous financial situation which continues to threaten its solvency.

£27m loss for 2013.


Blackpool Football Club Ltd pre-tax profit was down from £16.1m to £5.9m.  However, the finances are a little more complicated than this.  for more information see the excellent blog piece from independent fan Measured Progress below

Bolton have announced they are £163.8m in debt after parent company Burnden Leisure PLC released its figures for the year ending June 2013.  The group made a loss of £50.7m, which saw net debt rise from £136.5m

Operating loss: £14.7m (up from £8.6m in 2011-12 accounts)

£7.8m loss to June 2013 

Charlton Athletic (Baton (2010) Ltd)
£6.8m loss to Jun 2012 no accounts published yet for 2013.  The next accounts are due at companies house by the end of March.

Derby County
Derby’s losses in the past two years have been £7.9m and £7.7m.
Their figures for the year ending June 2013 were submitted at the beginning of this month

Doncaster (Patience Form Ltd)
Loss of £4.4m Jun 2013
Overall total loss of £4m (2011/12: £5.7m) to May 2013

The Club is due to report a loss before tax of £9.8m (2011-12 £16.0m loss) for the year to June 2013

At the time of writing, Leeds have not filed accounts for 2013 and they are due by the end of March.  They appear to be losing £1m a month.

The Club recorded losses in the year to 31 May, 2013 of £34 million (2012: £29.7m).

Middlesbrough Football & Athletic Company (1986) Limited's accounts were filed at companies house on 21 March but I haven't seen any open press mention of them yet.  Heavily reliant on Steve Gibson, they made a pre-tax loss of £13m in 2012.
Nottingham Forest made losses of £17.1 during the last financial year and had staff costs of £21m.
Those staff costs dwarfed the club's turnover of £14.4m during 2012/13.

Championship side Queens Park Rangers made a loss of over £65m in their accounts for the year to May 2013.
The Championship side posted a loss before tax of £2.3m in the year to 30 June 2013, down from £11.7m a year earlier. Operating loss was also cut from £21.8m to £2.9m.

Sheffield Wednesday
Loss of £3.7m to May 13

£200k profit after player trading (loss of £1.7m)

Financial results for the year ending 31 May 2013 show the Championship side made a net profit of £822,000 compared with £4.3m net profit in 2012. (won FA cup)

Yeovil announced a trading profit of £50k for 2012.  Their accounts have been filed for 2013 but it looks like they have a filing exemption so I can't find a freely available profit figure.  From the balance sheet of Yeovil Town Holdings company it looks like profits were pretty flat and so I'm guessing that they have broken even.  A connected company Yeovil Town Fc Centre of Excellence Limited suffered a small loss in net assets.


Based on the above one wonders why anyone would own a football club.  However, this aside it seems clear to me that the Championship can be divided into three broad categories.

There are those that have spent to win promotion.  These fall into two sub divisions; clubs such as Brighton and Leicester hoping to go up, and secondly those recent former Premier League teams such as Blackburn and QPR with legacy financial positions fighting to get back.  I suspect any fines for FFP breaches for newly promoted clubs will be fairly small compared to the potential riches of the Premier League, but penalties could be crushing for those that gamble and fail to reach the top echelons. 
It will be interesting to see whether the clubs that go up roll the dice once more and spend big to ensure continued top tier playing time or remain fairly prudent in terms of financial outlay, comforted by the fact that they have a financial cushion to survive on should they go down.  I suspect that most clubs automatically have relegation clauses in their player contracts by now.

Secondly there are a small number of clubs that have had to do this out of necessity, never mind fair play.  They have not had the sugar daddies to bank role them but have managed their resources carefully.  I include Barnsley, Yeovil, Watford, Wigan and maybe Blackpool (its hard to decipher the true figures) in this.

The remaining clubs, including Sheffield Wednesday, Reading, Charlton and Millwall are slowly reigning in the losses but are comfortably within the confines of FFP.  It is clear that there is still work to be done and it will take a few years as player contracts come up for renegotiation but they will get there in the end.
It is noticeable that broadly, with the exception of Wigan and Reading, all the teams that are breaking even or safely within the bounds of FFP are at the wrong end of the table.  I am an advocate of Financial Fair Play.  It's clear from the above figures that this level of spending is not sustainable.  I fear that if the current legal challenge to FFP does succeed then the playing field will become even less level and/or we will see a number of clubs going to the wall as certain owners get tired of their "toys" as they fail to reach promotion and discard them.

Please let me know of any errors and I will happily correct and acknowledge.  Similarly if you can fill in the gaps for certain teams I’d be extremely grateful.

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